An increasingly globalised softwood sector contending with diverse changes, as well as Europe’s softwood sector in recovery mode and facing ongoing challenges were some of the conclusions of the 2015 International Softwood Conference.
In 2014 Europe was the top softwood producer with output at 101 million m3, followed by the U.S. and Russia, at 95.7 million m3 and 36 million m3 respectively. China demonstrated the fastest growth, from 15.2 million m3 in 2010 to 28.8 million m3 in 2014, while consumption almost doubled to 47.3 million m3.
The Mainland continues to be a dominant global market shaper, playing a significant role in the global softwood trade rebound—world trade rose from 275 million m3 in 2010 to 315 million m3 in 2014; consumption went up from 272 million m3 to 313 million m3. While plantation area also doubled, rising demand was met mainly by log imports from New Zealand, Russia and the U.S., and lumber from Russia, Canada and Europe. The market slowed in 2015 but China’s timber sector is expected to grow, boosted by domestic logging curbs and timber building incentives.
European softwood exports to Japan also rose 7% to 39% in 20 years as a consequence of the country’s growing appetite for lumber (approx. 28 million m3 annually). The construction sector’s willingness to pay a premium for consistent quality has seen more KD and engineered wood use.
The EU may be out of recession, but the market remains a ‘roller coaster of market ups and downs’ said EOS president Sampsa Auvinen. Overall growth is slow with EU construction expected to rise just 1-2% in 2015.
“We’re seeing good recovery in some countries, but the concern is production out-running consumption. There’s talk of a decrease in EOS country softwood output to 79.6 million m3 in line with demand, but so far it’s not apparent,” said Auvinen.
With China regaining momentum and new markets such as Poland and Iran emerging, Europe’s long-term prospects look good.
“But Europe’s short-term prospects are weak and if mills wish to seek relief in volatile emerging markets, production must react to demand fluctuations quicker,” added Auvinen.
MENA and Russia momentum
The Middle East and North African (MENA) markets were also billed as having potential. The region currently imports 10 million m3 of softwood—most of it European and Russian—although U.S. sales rose 26% in 2014 to $27.4 million. Average economic growth rates are over 3% and combined population is over 400 million. Key conflicts are also abating; Standard & Poor recently gave Egypt a positive rating.
Meanwhile, the Russian softwood sector has been battling log export restrictions, the Ruble’s volatility and trade sanctions, said Sviatoslav Bychkov of Ilim Timber. But it has now come through, demonstrating strong growth potential. The annual timber cut—now at 202 million m3—is 500 million m3 below potential. Sawn wood exports are expected to rise 5.4% to 22 million m3 in 2015.
Russia’s long-term prospects are also optimistic thanks to demand from China, which consumes 39% of Russian sawn and 92% of log exports.
The 2015 ISC was co-hosted by the European Timber Trade Federation (ETTF) and European Organisation of Sawmill Industries (EOS), with the Netherlands Timber Trade Association (NTTA) as national hosts and former UK Timber Trade Federation Chief Executive John White as moderator.